Revise and Extend

Just wanted to take a moment and add a few thoughts to the previous post.

I wrote that post late Wednesday with the intention of keeping it up all day yesterday. I had a hunch that The Cartel would try to gun the PMs yesterday and they did. Is it a concern that they were able to smash gold through 1550? Of course. However, it's not the end of the world by any means.

Remember, I'm just working with a ruler and a sharpie here. I've been saying 1550 for a couple of months now based upon where I eyeballed the trendline from the 2008 lows. The key here is that 1550 was/is an approximation. Thankfully, several posters to the comments of the previous thread were able to define the trendline more exactly.

First up, "goldfinch" pointed out that Louise Yamada had been on KWN back on 12/6, basically giving the same numbers that we have been discussing here. As you know, Ms. Yamada is the only technical analyst for whom I have great respect. Her history and track record speak for itself. To discover yesterday that she is looking at the same charts as little ole me made me smile a bit. Maybe I have learned something over the years.

Just a few minutes later, "kazooclown" posted a more accurate representation of the weekly chart. I've reprinted it below so that you can see where he has drawn the trendline. As you can see, it's considerably below 1550.

Anyway, there are three important points I want you to take away from this thread:

1550 was not a hard and fast number. It was a projection and a guess. Therefore, failure at that exact level is not cause for extreme alarm and concern. That said, failure at 1500-1515 would, quite obviously, be a cause for extreme alarm and concern as both Yamada and "kazooclown" have shown us.

Yesterday was not likely the bottom. It could have been but it probably wasn't. If 1500-1515 is, in fact, a better representation of the trendline, then we should all be prepared for gold to trade down close to there sometime early in 2012. This final move down in gold will likely also cause silver to move down close to its long-term trendline near 25.

And this may be the most important point so I'll reprint it from the previous post: "So, here we are, caught in this strange new paradigm of extreme physical demand in the face of plummeting paper prices. In this environment, why on earth would we expect the gold price to suddenly stop and reverse exactly at some trendline on the chart? That makes no sense. The trendline is a reflection of market price history that simply has no bearing on today. Simply put, the trendline held in the past because investors still had some measure of faith and confidence in the current system. But this is the dawn of a new day. The Comex is dying. Soon, the spread between the price of paper and physical metal will diverge to such a point as to make the Comex an obsolete joke. But that day isn't here yet. It may still be weeks or months away. Until then, the imbalance between buyers and sellers will only increase so I expect the price of paper metal to decline even farther. All of this likely makes my little trendline as obsolete as a sliderule."

So far this week, open interest has held in there. In fact, its even expanded a little in silver. As long as total OI stabilizes above 400,000 in gold and above 100,000 in silver, we can consider the Comex to still be "alive". So, under those conditions, I have a high degree of confidence that the long-term trendlines will hold and will function as support as gold and silver finally find their bottoms from the manufactured declines of the final 4 months of 2011. The bottoms may have occurred yesterday but I think it's likely that we will see a final, capitulation event early in 2012 where gold drops into the 1500-1515 area and silver touches 25.

Lastly, as a pick-me-up, here's a fun little nugget I found while searching KWN for the Louise Yamada clip. It's an interview of the genuinely smart Egon von Greyerz of Matterhorn Asset Management in Switzerland. I think it will put a smile on your face and let me just say, I don't disagree with him...

This is a repost from the end of the last thread which will probably now not be read by many, but I thought the miner discussion was worth carrying over into the new thread.

Miners depend on a well functioning economy as much or more than anybody else. For one thing, they are very heavy users of electricity, and if electricity becomes unavailable or in short supply due to fuel interruptions, the miners will get shut down or rationed as to electricity, just as happened to the miners in S. Africa. They are also heavy users of labor, and if labor can't find food to eat or can't get to the mine to work, there won't be any mining. This has happened in the past in Argentina and other places where unrest has shut down the mines. They need stability to operate, and stability is one thing 2012 is likely to be short of. If a miner can't produce, it's will not retain value. The elites intend to buy up all these miners anyway, and they will not operate them for the benefit of the stockholders. They might even take them private. Do not assume operations as normal for 2012. It is scheduled to be the most eventful year in 2000 years. As a result of instability, the miners will not be profitable. The elites will naked short the miner stocks until they take them down, and investors will not realize a profit.

Yes, holding physical is a risk, as physical is subject to looters, elitist jackboots, or government confiscation efforts. However, it will likely be one of the three asset classes (guns, grub, gold) that "all the little people" have that will endure the crash. Miners will not.

Let's see, we could be in a time when technical analysis doesn't work for precious metals.

I've read often that fundamentals don't necessarily work for the shiny stuff because they are a manipulated market.

That leaves us with?????? Hold, hope and pray???? Avoid at all costs and break out the canned bacon??????? Retreat to the cave with the stacks of precious metals and plenty of lead, for keeping said stacks??????

International Bacon Day or Bacon Day is an unofficial observance, often celebrated on December 30th.

Bacon day celebrations typically include social gatherings during which participants create and consume dishes containing bacon, including bacon-themed breakfasts, lunches, dinners, desserts, and drinks. Bacon Day gatherings may also include the consumption of soy bacon or turkey bacon.

Bacon Day was conceived in Massachusetts in 2000 by the residents of the Crag, and was supplemented in 2004 by a group of CU Boulder (Colorado) graduate students. Bacon Day in Manchester UK is celebrated by several students on the 14th January, prior to January examinations as a distraction from revision. Bucknell students are also known for their bacon day celebrations, calling themselves "Meatheads", and gorging on as much bacon as possible.

I think we saw our gold/silver low's for awhile. That's what the charts seem to be saying since pre-market yesterday. It's been upwards since. And for what real tangible reason?

It's the end of the year and the sell off for tax purposes and fund repositioning has been completed. The situation in the EU has much to do with all of this obviously. I don't see us going below $1500 or $25 unless some huge war breaks out or the Euro collapses in a very sudden and ugly way.

In hindsight, it would have made no sense to do a QE or whatever just before years end in Nov. or Dec 11'. Not enough time before this year ends due to tax positioning/ mutual ( and hedge) fund repositioning for the big boys to fully take advantage of any new monetary easing. My guess is it happens in the January FOMC at months end. Or at least the hint or language to propel interest back into the commodities sector. There is so much money on the sidelines that at some point they will entice a portion of it back into the marketplace so they can fleece it slowly.

The bait to get money back in will be some form of easing whether it's implied or actually instituted. Whether it's in the form of silent massive swaps with the Fed or something else we don't entirely understand at this point is another matter.

Were in uncharted territory so the obvious might be unrecognizable, for now. I believe they have something in place that's made all the recent EU hand wringing and rhetoric fade away.

Think about it. I hear silence for the most part since that last EU meeting in Brussels.

Remember the Europe on $5 a day of the 1960s ! The days of wine, CANNED BACON and roses ! Those charming, thread bare Paris hotels with bidet (a kind of liquid panty liner) and washing your stinky nylon (I'm talkin' men's socks!) socks in the wash basin/urinal ? You wrang them out as completely as you could then hung them on the window latch ? I even used the "torniquet method" of looping them over the faucet and twisting ! You wanted to get all the loose water out so they would dry over night ! A "Smack Down" is the same......they want to wring out every last drop of loose silver from weak, undeserving hands ! So, man up, stop whining, put on a smile and a fresh panty liner and resume stacking ! Monedas 2011 Comedy Jihad My Hemingway Years !

TF, thanks for the link to that great article from Ranting Andy. He gets it as far as market manipulation is concerned. Where I think he goes wrong is in statements like this:

Quote:

All I can say is the fundamental case for Precious Metals grows stronger each day, EXACTLY why the Cartel is fighting back so hard. This year will go down in the record books as one of infamy regarding illegal suppression of PAPER gold and silver, going back to "D-Day" on November 9, 2010, when I first saw FEAR in the Cartel's eyes, and following up with an incredible NINE major attacks this year

IMO, the cartel is not operating in fear that their system will crash. They fully expect and intend for it to crash, and they expect to profit unbelievably from shorting the orchestrated crash of the Euro, US treasuries, and the dollar. Fear is not the operative word with the EE. Things are going pretty much according to schedule. They will position themselves to take advantage in off-shore hedge funds of the Euro and dollar's demise. They will turn that wealth into ownership of tangible assets such as basic companies (farms, utilities, rail, trucking, manufacturing), mines, real estate, and government facilities. They intend to end up owning EVERYTHING, including the bodies of the survivors. In the process they intend to make the dollar and all dollar derivatives worthless, just like they did with MF Global. They will not honor laws or contracts (Remember this statement? Give me control of a nation's money and I care not who makes the laws?). They have power and nothing short of the uprising of the plebes will stop them, and they will do whatever it takes to stop a revolt.

The elites are not panicking. Things are going pretty much according to plan. All paper investments will be destroyed. Got gold, grub, guns, and God?

To every rise there must be a fuel to lift the market. This time the fuel may be the anticipated lower bottom that never materializes. A relief rally that teases with higher high's than expected, and higher lows. Soon the pile on begins.
Chasing.
The problem being self preservation. Basically every nation knows that Gold will always be real money, therefore they hold it.
Until the Washington agreement end, there was a selling unity. At that point everyone eyed the door, as they knew someone was going to bolt soon. And bolt they did, as CB's are now buyers of Gold to varying degrees. To be successful a fiat currency must eliminate real money. Gold must be completely removed from the system. IMO there is at this point an unsuccessful attempt to do that.
Note the recent attempt by China-Japan to work around the dollar. Note the recent China encouragement (a second time)for citizens to buy G&S.
This attempt will fail, as even with economies collapsing, chaos, destruction, and worse....the metals will prevail. Point being, as long as they exist, they are still the ultimate money.......the harder they try to remove them, the more they are sought....the greater demand they create. Just as any official denial is admission of truth!

Going forward the cracks are growing more than we know as we are only fed (able to obtain) information that has aged. This battle for control is accelerating and will surprise IMO. The major players will jockey for position and the holder of the most gold holds the highest position, IF he can keep it!
2012 is important for a reason. I am not trying to buy at the bottom, this is close enough, and I now think, may be it!
I am done till the much higher correction materializes.

A recent Brookings Institution report has now confirmed what many have suspected for some time – that the United States government (and virtually every other government in the world) has the capability to monitor and record nearly every interaction that occurs within its national borders.......

But the ability to record everything will tilt the playing field back in favor of repressive governments by laying the foundation for a plethora of new approaches to targeting dissent. When all of the telephone calls in an entire country can be captured and provided to voice recognition software programmed to extract key phrases, and when video footage from public spaces can be correlated in real time to the conversations, text messages, and social media traffic associated with the people occupying those spaces, the arsenal of responses available to a regime facing dissent will expand. Some changes will be immediate and tactical. Instead of implementing broad social media or Internet shutdowns in response to unrest, governments in possession of complete communications databases will be able to conduct more selective censorship or alteration of message traffic during periods of instability. This will provide a great capability to shape or quell dissent.....

Pervasive monitoring will provide what amounts to a time machine allowing authoritarian governments to perform retrospective surveillance. For example, if an anti-regime demonstrator previously unknown to security services is arrested, it will be possible to go back in time to scrutinize the demonstrator’s phone conversations, automobile travels, and the people he or she met in the months and even years leading up to the arrest.......

Amazing display of audacity and hubris. Then again, they told us this would happen:

“The technotronic era involves the gradual appearance of a more controlled society. Such a society would be dominated by an elite, unrestrained by traditional values......Soon it will be possible to assert almost continuous surveillance over every citizen and maintain up-to-date complete files containing even the most personal information about the citizen. These files will be subject to instantaneous retrieval by the authorities.”

“Society dominated by an elite whose claim to political power would rest on allegedly superior scientific know-how. Unhindered by the restraints of traditional liberal values, this elite would not hesitate to achieve its political ends by using the latest modern techniques for influencing public behavior and keeping society under close surveillance and control.”

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